5-Davao-Sawmill-vs-Aproniano-G.docx

PSU LAW 2nd year, 1st Sem

LAW ON PROPERTY

5

Davao Sawmill vs Aproniano G. Castillo & Davao Light & Power Co., Inc., G.R. No. L-40411, August 7, 1935 (Paras, Page 21, Article 415 #6: Paragraph 4 letter B: Placing by the owner)

FACTS: Davao Sawmill holds a lumber concession from the Government of the Philippines and operates as lessee, a sawmill on land belonging to another. Davao Sawmill had erected a building which has machinery used by the company. The properties object of the conflict were machines placed by Davao Sawmill and mounted on foundations of cement. Said property was levied upon as personalty by the sheriff in another action in which the court rendered judgment in favor of herein defendant Davao Light & Power Co. As such, said company proceeded to take possession of machinery in question. *It must be noted, that Davao Sawmill has treated the machinery as personal property by executing chattel mortgages in favor of third persons. Davao Saw Mill contends that the property is real, based on Art 334, par 1 of the old civil code. Davao Light & Power contends that the property is personal, based on par 5 of the same. ISSUE: WHETHER THE PROPERTY IS REAL OR PERSONAL HELD: The property in question is PERSONAL. Davao Sawmill’s characterization of the property as CHATTELS* is indicative of intention and impresses upon the property the character determined by the parties. Said machinery was intended by the LESSEE for use in a building erected on the land by the latter to be returned to the LESSEE on the expiration or abandonment of the lease. Machinery which is movable in nature only becomes immobilized when placed in a plant by the owner of the property or plant, but not when so placed by a tenant, a usufructuary, or any person having only a temporary right, unless such person acted as the agent of the owner.

PSU LAW 2nd year, 1st Sem

LAW ON PROPERTY

Davao Sawmill v. Castillo DAVAO SAW MILL vs. APRONIANO G. CASTILLO and DAVAO LIGHT & POWER CO., INC. G.R. No. L40411 August 7, 1935 Facts: Davao Saw Mill Co., Inc., is the holder of a lumber concession from the Government of the Philippine Islands. However, the land upon which the business was conducted belonged to another person. On the land the sawmill company erected a building which housed the machinery used by it. Some of the implements thus used were clearly personal property, the conflict concerning machines which were placed and mounted on foundations of cement. In the contract of lease between the sawmill company and the owner of the land there appeared the following provision: That on the expiration of the period agreed upon, all the improvements and buildings introduced and erected by the party of the second part shall pass to the exclusive ownership of the lessor without any obligation on its part to pay any amount for said improvements and buildings; which do not include the machineries and accessories in the improvements. In another action wherein the Davao Light & Power Co., Inc., was the plaintiff and the Davao, Saw, Mill Co., Inc., was the defendant, a judgment was rendered in favor of the plaintiff in that action against the defendant; a writ of execution issued thereon, and the properties now in question were levied upon as personalty by the sheriff. No third party claim was filed for such properties at the time of the sales thereof as is borne out by the record made by the plaintiff herein It must be noted also that on number of occasion, Davao Sawmill treated the machinery as personal property by executing chattel mortgages in favor of third persons. One of such is the appellee by assignment from the original mortgages. The lower court rendered decision in favor of the defendants herein. Hence, this instant appeal. Issue: whether or not the machineries and equipments were personal in nature. Ruling/ Rationale: Yes. The Supreme Court affirmed the decision of the lower court. Machinery which is movable in its nature only becomes immobilized when placed in a plant by the owner of the property or plant, but not when so placed by a tenant, a usufructuary, or any person having only a temporary right, unless such person acted as the agent of the owner.